No need for equity stake, says Boeing

Boeing CEO Dave Calhoun says he does not want the US treasury to take an equity stake in the planemaker as a condition of government loans as credit markets freeze amid the coronavirus pandemic.

“I don’t have a need for an equity stake,” Calhoun said on Tuesday. “If they force it, we just look at all the other options and we’ve got plenty of them.”

Boeing has sought $60bn in US government loans for itself and the aerospace industry.

The US Congress could soon reach agreement on a stimulus and rescue package worth up to $2-trillion to respond to the huge economic damage from the Covid-19 pandemic.

“There are a lot of options for us in the private markets , but the credit markets have to be open,” Calhoun said, noting that Boeing “has $15bn in the bank”.

US legislators have said they could demand equity, warrants or options as a condition of government loans. “If they attach too many things to do it, of course you take a different course.”

Calhoun wants the government to allow Boeing to borrow funds and the government to collect interest. “We want to pay everything back,” he said.

Boeing shares rose nearly 16% on Tuesday, but the stock is still down more than 60% over the past month.

Last week, S&P downgraded Boeing’s credit and warned that the coronavirus outbreak could hit Boeing’s cash flow further, as airline customers cancel flights and defer aircraft orders due to a plunge in travel demand.

The ratings agency lowered the credit rating on the planemaker to BBB from A- and now expects 2020 free cash flow in a range of negative $11bn to $12bn, down from a prior estimate of positive $2bn.

Boeing said on Monday that it will halt production for two weeks at its twin-aisle jetliner factory in Washington state due to the spread of the coronavirus. It accounts for about 80% of Boeing’s production, Calhoun said.